SanDisk and SK Hynix Plunge Together...JPMorgan: "Hidden Margin Debt Fuels Next Shock"

▲ SanDisk (SNDK), Western Digital (WDC), SK Hynix / AI Generated Image

SanDisk (SNDK) and Western Digital (WDC) plummeted despite reporting earnings that exceeded market expectations. SK Hynix instantly dropped by 30%, and a warning emerged from Wall Street that hidden margin debt could amplify the next shock.

According to Benzinga on August 6 (local time), SanDisk reported fourth-quarter earnings per share of $39.25 and revenue of $8.97 billion. Both figures surpassed market estimates of $34.51 and $8.39 billion, respectively. However, the first-quarter EPS forecast of $44-46 fell short of the unofficial market estimate of approximately $50. The revenue forecast of $10.3-10.8 billion was similar to the market estimate of $10.62 billion.

Western Digital also exceeded market expectations, reporting fourth-quarter EPS of $3.56 and revenue of $3.75 billion, compared to estimates of $3.23 and $3.7 billion. The first-quarter EPS forecast of $3.85-4.15 was also higher than the estimated $3.77. However, investors reacted to the failure to meet unofficial expectations, which had risen higher than the demand for memory and disk for artificial intelligence (AI). SanDisk and Western Digital fell by 10.38% and 14.48%, respectively, in pre-market trading.

After spinning off from Western Digital on February 21, 2025, SanDisk surged to $2,354.39 on June 22, 2026, but the decline from peak to trough reached 57%. Western Digital also garnered attention as an AI beneficiary stock, climbing to $799.87 on June 18, 2026. The Arora Report pointed out the valuation gap between the two stock groups, stating that SanDisk's forward 12-month price-to-earnings ratio dropped to 5.65 times after the plunge, while Apple (AAPL) traded at approximately 34.1 times.

Instability in the semiconductor market was also evident in the Korean stock market. SK Hynix instantly plunged by 30% on the alternative trading system NextTrade. The Arora Report analyzed that while the Korean stock market previously followed the US market, recently, US semiconductor stocks have been trailing the movements of the Korean market, which is led by SK Hynix and Samsung Electronics. JPMorgan Chase (JPM) CEO Jamie Dimon also warned that the size of undisclosed margin debt is very large and could pose risks to the market.

The Arora Report analyzed that the stock market could move 30-50% in either direction, up or down, in the future, and that whether AI growth is a long-term structural trend or a phenomenon driven by business cycles will be a key variable determining the direction. It emphasized the need to consider not only the earnings growth of AI companies but also the market structure connecting margin debt and the Korean and US stock markets.

[Article Key Summary]

-SanDisk and Western Digital fell by 10.38% and 14.48%, respectively, in pre-market trading despite reporting earnings that exceeded market expectations.

-SK Hynix instantly plunged by 30% on NextTrade, revealing extreme volatility in the semiconductor market.

-Jamie Dimon warned of market risks, stating that the size of undisclosed margin debt is very large.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*